Canada’s main stock index climbed to a more than 13-week high on Monday, as the energy sector got a boost from higher oil prices and talks to update the North American Free Trade Agreement entered a crucial week.
The Toronto Stock Exchange’s S&P/TSX composite index rose 76.81 points, or 0.49 per cent, to 15,806.21.
Oil prices rose for the fourth straight day on Monday to hit levels not seen since late 2014, boosted by the latest trouble for Venezuelan oil company PDVSA and the possibility that the United States could re-impose sanctions on Iran.
U.S. West Texas Intermediate (WTI) crude futures rose $1.01, or 1.5 per cent, to settle at $70.73 a barrel. This was the first time since November 2014 that WTI had climbed above $70. Brent crude futures jumped $1.30, or 1.7 per cent, to settle at $76.17 a barrel.
U.S. oil major ConocoPhillips moved to take Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award.
“If ConocoPhillips is successful, then it will limit the revenues PDVSA will have and give them even more problems paying their bills and producing their oil,” said Gene McGillian, manager of market research at Tradition in Stamford.
In Toronto, energy stocks pared gains late in the trading day, finishing up 0.2 per cent. Cenovus Energy Inc. rose 3.6 per cent, while Imperial Oil Ltd. was up 0.9 per cent.
A 1.7-per-cent jump from Manulife Financial Corp. led financial stocks higher on the day. Royal Bank of Canada finished 1 per cent higher, while Canadian Imperial Bank of Commerce was up 0.8 per cent.
The Canadian dollar weakened against its U.S. counterpart on Monday as the greenback broadly rose, but the currency stuck to its recent holding pattern as oil prices climbed and investors weighed talks to update the NAFTA trade deal.
The Canadian dollar was trading 0.4 per cent lower at $1.2892 to the greenback, or 77.57 U.S. cents. It traded in a range of $1.2840 to $1.2900.
The loonie on Friday hit a one-month low at $1.2918 but it has mostly been confined to a narrow range over the past two weeks.
“We are just waiting for a break,” said Eric Theoret, currency strategist at Scotiabank. “We do see the Canadian dollar headed higher after this consolidation.”
Wall Street climbed on Monday, boosted by Apple’s sixth straight day of gains and by a surge in oil prices to their highest since 2014.
The S&P energy index ended 0.18 per cent higher, although it surrendered earlier stronger gains after U.S. President Donald Trump tweeted that on Tuesday he would announce his decision on whether to withdraw from the Iran nuclear deal.
Trump has threatened to withdraw from the agreement, which provided Iran with relief from sanctions in exchange for limiting its uranium enrichment capacity, unless European signatories to the accord fix what he has called its shortcomings.
Energy stocks rallied earlier in the session due to troubles for Venezuelan oil company PDVSA and by the looming decision on whether the United States will re-impose sanctions on Iran.
“Oil has done well in anticipation of the announcement from Trump. People are braced for the worst,” said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.
Apple added 0.72 per cent, extending gains since it reported results last week and after Berkshire Hathaway on Friday disclosed it had boosted its stake in the iPhone maker. Warren Buffett told CNBC on Monday, “I’d love to own 100 percent of it.”
“Buffet took such an outsized position in Apple, which was reassuring to a lot of people,” said Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors in Chicago. “Psychologically, people went into last week a little skeptical, but I think we saw a thawing of that late last week and over the weekend.”
Worries over inflation and interest rates, along with tariff and geopolitical tensions, have overshadowed a solid earnings season, which is on track to record its best quarter in seven years.
Nearly 80 per cent of the 417 S&P 500 companies that have reported so far have topped profit estimates, according to Thomson Reuters I/B/E/S. That is well above the long-term average of 64 per cent and the average of 75 per cent over the past four quarters.
Three quarters of companies have reported revenue above expectations, compared to 60 percent in a typical quarter. That suggests that companies are growing their businesses, and not solely benefiting from deep corporate tax cuts introduced this year.
The Dow Jones Industrial Average rose 0.39 per cent to end at 24,357.32, while the S&P 500 gained 0.35 per cent to 2,672.63. Earlier, the S&P 500 was up as much as 0.75 per cent.
The Nasdaq Composite added 0.77 per cent to 7,265.21.
Seven of the 11 major S&P sectors rose, with the technology index climbing 0.79 percent.
AthenaHealth jumped 16.39 per cent after hedge fund Elliott Management proposed an all-cash offer that would value the healthcare IT company at about $6.5 billion.
Utilities, healthcare consumer staples and telecoms all declined.
Reuters